Understanding TIPS

By Matthew Kerkhoff

There are many ways to gauge inflation. Constant adjustments to inflation index calculations, as well as the existence of a variety of inflation metrics, cause confusion as to just how much inflation exists in our economy. The two most common measures of inflation are the Consumer Price Index (CPI) and Personal Consumption Expenditures (PCE). But this week let's take a different approach and look at what the markets have to say.

So how do we extrapolate what global investors expect to see in terms of inflation?

To get started we need to understand TIPS -- Treasury Inflation-Protected Securities. Today's article will go over the basics of what TIPS are and how they operate. Then on Friday, we'll take this discussion one step further to determine market expectations for inflation. Depending on your own personal inflation expectations, you may want to consider TIPS as part of your portfolio. However, make sure to wait until Friday's piece before taking ... Log in or subscribe to continue reading.

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